On Wednesday, March 16th, the Federal Reserve raised interest rates by 0.25%, the first time the Fed has raised interest rates since 2018. Fed Chairman Jerome Powell expects that the Federal Reserve will raise interest rates six more times in 2022.

• Explain HOW the Federal Reserve (or any central bank) raises interest rates like this. What specific action does the central bank take to increase interest rates, and WHY does this cause interest rates to increase?
• WHY is the Federal Reserve raising interest rates in 2022? What Macroeconomic problem is this action meant to address, and HOW is it likely to address this problem?
• What are the main Macroeconomic drawbacks that are likely to come from the Federal Reserve raising interest rates?

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